Abercrombie and fitch organizational culture

Case Studies: Using concepts from the chapter readings students will provide their own in depth analysis of each assigned case and answer all questions at the end of each case study. Each analysis should include an in-text citation and end of paper reference (from the chapter with a page number) that relates to the case study. In addition, an Assignment Cover Sheet is required with each analysis (see Appendix).

Case studies are listed in the course syllabus

Case 2: Gender: The Classic Look of Discrimination: Abercrombie & Fitch’s Struggle to Manage Diversity
– Answer questions 1-6

Text book name is Canas, K. A. & Sondak, H. Opportunities and Challenges of Workplace Diversity (3rd Edition). Pearson.

Please answer the 4 discussion questions below. Please number your answers individually. APA 2 page is required. In text citation of the textbook name above must be included in all questions.

Case Study: The Classic Look of Discrimination: Abercrombie & Fitch’s Struggle to Manage Diversity
Who represents an “all-American” standard? For national clothing retailer Abercrombie & Fitch, a company that meticulously branded itself as having the “A&F Look”—“cool,” “classic,” and “all-American”—the answer was simple: a young, athletic, beautiful, white male. 1 As Abercrombie & Fitch developed their brand, they worked diligently and systematically to create their image by hiring employees and models who reflected this specific look. What began as merely a marketing strategy developed into a pattern of human resource management that ultimately led to two discrimination lawsuits in which Abercrombie & Fitch was charged with creating an “exclusively white company image used to discriminate against non-whites.” 2 The purpose of this case study is to describe Abercrombie & Fitch’s history, development, and current status and to consider how a successful century-old organization ended up facing class-action discrimination lawsuits, ultimately paying over $40 million to several thousand African American, Latino, Asian American, and female plaintiffs. 3

The History of Abercrombie & Fitch
David T. Abercrombie, a passionate outdoorsman and entrepreneur, founded Abercrombie & Co. in 1892 with the intent of providing high-end outdoor products to an elite clientele. A short time later, in 1900, Abercrombie entered into a partnership with attorney, visionary, and Abercrombie & Co. customer Ezra Fitch, and in 1904 Abercrombie & Co. was relaunched as Abercrombie & Fitch Co. From 1900 to the late 1960s, Abercrombie & Fitch sold outdoor equipment, furnishings, and clothing to wealthy, high-profile customers such as Dwight Eisenhower, Ernest Hemingway, John F. Kennedy, and Teddy Roosevelt. It was during this time that the brand first became associated with the “Classic American Image” as the company catered to an affluent, largely white male customer base. 4 A quote from Otis L. Guernsey, who was president during the 1940s, provides a sense of Abercrombie & Fitch’s brand elitism: “The Abercrombie & Fitch type does not care about the cost, he wants the finest quality.” 5

In the 1960s, Abercrombie & Fitch entered a period of declining profits due largely to market changes, which eventually forced the company into bankruptcy and led to the subsequent purchase of the Abercrombie & Fitch name, trademark, and mailing list by Oshman’s Sporting Goods in 1978 for $1.5 million. 6 Oshman’s attempted to rebuild the company by opening a chain of 26 stores across the country that largely sold sport and fitness equipment designed specifically for the brand. The sporting goods company ultimately failed, however, to turn Abercrombie & Fitch into a successful sporting goods store. 7

In 1988, The Limited, Inc., purchased Abercrombie & Fitch from Oshman’s for $46 million in cash and repositioned the company as a clothing retailer, focusing primarily on men’s clothing. In 1992, Michael Jeffries was appointed CEO, and Abercrombie & Fitch entered into a phase of intense expansion, increasing from 35 to 67 stores in just three years and ultimately to over 1,100 today in the United States, Canada, and the United Kingdom. 8 In 1996, Abercrombie & Fitch entered the New York Stock Exchange,9 and in 1998 was spun off from The Limited, Inc. 10 Sales during this time increased from $85 million in 1992 to $165 million in 1994 and have currently reached approximately $3.5 billion in 2009. 11 It was during this period of growth that Jeffries began targeting youth with the goal of branding his product as emblematic of a culture and lifestyle within the context of Abercrombie & Fitch’s “Classic American Image,” or, what he described as “the embodiment of ‘American cool.’ ” 12

The “A&F Look”
In 2002, when on a conference call with analysts, Jeffries described Abercrombie & Fitch’s target customer as an “18-to-22-year-old college guy who has a good body and is aspirational.” He continued, “If I exclude people—absolutely. Delighted to do so.”13 In Jeffries’ quest to market the Abercrombie & Fitch brand, he seemed to suggest that the company was willing to ignore anyone who did not fit or aspire to be part of the young, white, good-looking, athletic demographic. 14 Hiring a certain kind of employee became part of this marketing effort.

At Abercrombie & Fitch, a strong emphasis is placed on hiring the best-looking people who fit the retailer’s particular brand image. Abercrombie & Fitch employees, specifically the sales people, are hired as brand representatives. According to a former assistant store manager, “If someone came in with a pretty face, we were told to approach them and ask them if they wanted a job. They thought if we had the best-looking college kids working in our store, everyone will want to shop there.” 15 Abercrombie & Fitch critics argue that one only needs to walk into an Abercrombie & Fitch store and look at the salespeople as well as the quasi-risqué posters to see the pervasiveness of the “A&F Look.” 16

The company selects models for its catalogs and overall marketing campaign from among its store personnel. In terms of the selection process, each store is required to send pictures of the brand representatives to corporate headquarters from which models are chosen. A former brand representative at the Staten Island store said, “Store managers would set up photo shoots that used brand reps as models.” 17 Store managers also routinely conduct grading sessions of store employees, assigning grades based upon looks. 18 Former employee Kristen Carmichael claimed that in 2008 she was pulled from the sales floor and placed in the back room to fold clothes after managers gave her face a zero rating. She also claimed that a manager told her “that she wasn’t attractive enough to work on the floor.” 19

Accounts detailing the 2007 opening of an Abercrombie & Fitch store in London reflect the retailer’s obsession with the perfect look. In particular, Jeffries promised “a store full of gorgeous kids,” and in order to deliver on his promise, the company reportedly hired 14 recruiters to “scour pubs, clubs, gyms, sport meetings and students’ unions in search of some ripplingly healthy specimen.” Jeffries also said, “These great-looking college kids exist all over the world … We think there are Abercrombie kids everywhere.” 20 On the surface, Jeffries’ intense passion for branding the perfect look does not constitute discrimination; it is perfectly legal to market aggressively to a particular audience and build your brand in a particular way. In light of this, how did Abercrombie & Fitch’s actions constitute discrimination?

Discrimination at Abercrombie & Fitch
There are a number of instances in which Abercrombie & Fitch’s corporate culture—including policy and product design—reflected both subtle and blatant instances of discrimination. In early 2002 the company released a line of T-shirts with what were described as demeaning racial stereotypes. 21 One T-shirt with unflattering caricatures of Asians on it read: “Wong Brothers Laundry Service: Two Wongs Can Make It White.” Public objection against the company for the T-shirts resulted in Abercrombie & Fitch eliminating them from the stores and stopping production. In response, an Abercrombie & Fitch representative revealed the company’s obtuseness and said, “We personally thought Asians would love this T-shirt.” 22 The offensive T-shirts prompted an e-mail and phone campaign among Asian Americans in California to boycott the company. 23 Asian American student groups across the nation “held rallies . . . aimed at raising public awareness about the issue.” 24

In order to maintain the appropriate store image, each brand representative received a copy of what was known as the Look Book. 25 This small book was the employee’s guide to adopting the image of Abercrombie & Fitch. According to a 1996 copy:

Our people in the store are an inspiration to the customer. The customer sees the natural Abercrombie style and wants to be like the Brand Representative . . . Our Brand is natural, classic and current, with an emphasis on style. This is what a Brand Representative must be; this is what a Brand Representative must represent in order to fulfill the conditions of employment. 26

Other guidelines that are articulated in the Look Book include descriptions of appropriate hair cuts and styles (they must be “natural”), which prohibit a fade cut (described in the book as more scalp visible than hair), shaving of the head, and dreadlocks for men and women. Jewelry guidelines include directives that jewelry be simple and classic, no thumb rings, and no gold chains for men. 27 Many of these directives in the Look Book have led some to criticize the racial undertones in the described Abercrombie & Fitch image, claiming that the discouraged hair styles and jewelry guidelines specifically delineate styles and habits typical for people of color. 28

Numerous accounts from former employees paint Abercrombie & Fitch as a company that struggled to balance their branding strategy with employee rights. According to a former Abercrombie & Fitch employee, “Ninety-nine percent of us were white.” The same employee explained that “style, not skin color, would discourage stores from hiring minorities since the ‘A&F Look’ discounts the urban style of dress and general appearance that many black youth favor.” 29 In another example, former employee Karma Miller claimed that the night crew at her store, during her shift, was composed entirely of minority employees, while the retail sales staff was composed entirely of white workers. “Something felt weird,” she said. “I didn’t take it as discrimination at the time, or I wouldn’t have worked there.” 30 Miller also indicated that the night and day crews were completely separate and the day crew ignored her when she went to the store to pick up paychecks. Another former employee claimed that the night crew was told not to come into the store until after it was closed, when all of the customers were gone. This employee stated, “Everyone who worked in the daytime was Caucasian” and that minority employees who were hired automatically received the night shift. 31

Anthony Ocampo, a Filipino-American plaintiff in the case, said that when reapplying at a store where he had previously worked, a manager said, “We’re sorry, but we can’t rehire you because there’s already too many Filipinos working here.” 32 Another plaintiff, Jennifer Lu, who was fired after a corporate visit to the store, said, “A corporate official had pointed to an Abercrombie poster and told our management at our store, ‘You need to have more staff that looks like this.’ And it was a white Caucasian male on that poster.” 33 Carla Grubb felt that she was scheduled for menial work, coming in “at closing time and wash[ing] the front windows and vacuum[ing] and wip[ing] off mannequins. While I was washing windows and vacuuming and dusting, my coworkers, my white coworkers, were folding the clothes, which I wanted to do, selling the clothes, which I wanted to do.” 34 As suggested by the above testimony, Abercrombie & Fitch’s branding strategy—trying to create the perfect look throughout every aspect of their organization—moved them away from innovative marketing into the realm of discrimination because they were treating people differently and unfairly specifically because of their race or national origin (both of which are federally protected classes).

Abercrombie & Fitch Is Sued for Discrimination
In June 2003, the clothing retailer was charged with discrimination in a class-action lawsuit, Gonzalez v. Abercrombie & Fitch, which accused Abercrombie and Fitch of racial discrimination in hiring and employment practices. A second lawsuit filed five months later by the Equal Employment Opportunity Commission (EEOC) also accused Abercrombie & Fitch of discrimination based on charges received by the commission dating to December 21, 1999. 35 A third lawsuit filed in November 2004, West v. Abercrombie & Fitch Stores, Inc., investigated gender discrimination at Abercrombie & Fitch. All three lawsuits were resolved through mediation that began in April 2004 and was settled a year later in April 2005. The lawsuits received backing from national groups such as the Mexican American Legal Defense and Educational Fund, the Asian Pacific American Legal Center, the NAACP Legal Defense and Educational Fund, Inc., and the EEOC. 36

The class-action lawsuit, which was brought by 16 individual plaintiffs, Gonzalez v. Abercrombie & Fitch, alleged that the retailer illegally discriminated “against minorities on the basis of race, color, and/or national origin with respect to hiring, firing, job assignment, compensation, and other terms and conditions of employment.” 37 The allegations continued that the company enforced “a nationwide corporate policy of preferring white employees for sales positions, desirable job assignments, and favorable work schedules in its stores throughout the United States.” 38 This lawsuit was settled by negotiating a consent decree.

According to the consent decree documentation, the EEOC first issued a Letter of Determination “finding probable cause that the charging party was denied a permanent sales or brand representative position, denied assignments, and terminated due to his national origin.” 39 The EEOC also found probable cause that Latinos and African Americans were discriminated against as a class. Additional Letters of Determination were issued in September and November of 2004, “finding probable cause that Abercrombie violated Title VII by discriminating against minority individuals on the basis of national origin, color, race, and/or gender (female including minority women) in hiring, staffing, constructive discharge, failing to promote into manager positions, steering, and discharge, on an individual basis and also on nationwide class basis.” 40

Abercrombie & Fitch denied the allegations. Jeffries said, “We have, and always have had, no tolerance for discrimination. We decided to settle this suit because we felt that a long, drawn out dispute would have been harmful to the company and distracting to management.” 41 This sentiment is reflected in a Miscellaneous Provision included in the consent decree:

Abercrombie denies that it has engaged in any policy or pattern or practice of unlawful discrimination, or that it has engaged in any other unlawful conduct as alleged in the Consolidated Litigation, and Abercrombie’s entry is not and may not be used by any person in any proceeding as an admission or evidence that Abercrombie and/or its employees, managers, and/or attorneys have on any occasion engaged in discriminatory employment practices or any other unlawful conduct, such being expressly denied. Abercrombie has voluntarily entered into this Decree because it believes the actions it has agreed to undertake demonstrate its strong commitment to diversity and equal employment opportunity. 42

Terms of the Consent Decree
Although the clothing retailer never admitted guilt in the lawsuits, it agreed to pay approximately $50 million in settlement costs. 43 The settlement included $40 million in payments to the plaintiffs and approximately $10 million to monitor compliance and pay attorney’s fees. The consent decree outlines each diversity initiative agreed to by Abercrombie & Fitch. In particular, Abercrombie & Fitch agreed:

· Not to implement any policy or engage in any practice that discriminates against African Americans, Asian American, Latinos, or women.

· To retain a diversity consultant.

· To establish an Office of Diversity within the company.

· To hire a Diversity Vice President.

· To provide diversity training for all employees, especially those in management positions.

· To set up an internal complaint procedure to provide for the filing, investigation, and remedying of complaints of discrimination.

· To revise performance evaluations for all managerial positions to include measurement of diversity management performance.

· To change its job analysis and criteria to eliminate any criteria that described involvement of candidates in target colleges, sororities or fraternities, or specific athletic events.

· .

· To develop and implement recruiting and hiring protocols that require Abercrombie & Fitch to seek out qualified minority applicants.

· To work to promote minority employees into managerial positions.

· To hire no fewer than 10 diversity recruiters to help with recruiting minority applicants.

· To attend minority recruiting events.

· To maintain proper documentation for all recruiters.

· To establish benchmarks for hiring and employment.

· To change their marketing to reflect diversity.

· To change their advertising strategy to include periodicals and media outlets that target minority audiences.

· To put in place a court-appointed monitor to supervise the company’s compliance with the decree. 44

The diversity initiatives agreed to by Abercrombie & Fitch and outlined in the consent decree represent an attempt both to create more diversity within the organization and to manage diversity more effectively. According to Kimberly West-Faulcon, Western regional counsel for the NAACP Legal Defense and Education Fund, “Abercrombie had a back-of-the-bus mentality . . . . Now instead of hiring them in the back of the store, they will have diversity recruiters. It sends a message to young people that we’re moving past this kind of thing.” 45

Current Status
So what lasting change was effected by the lawsuits and the settlement? Has Abercrombie & Fitch been able to change the corporate culture that promoted and encouraged discrimination in its hiring practices? According to reports, the Look Book has been revised to represent a more diverse “A&F Look.” 46 Store managers now take pictures of their brand representatives to send to the corporate headquarters so that it is able to list the top 25 and bottom 50 stores in terms of achieving the greatest staff diversity. 47

In another attempt to embrace diversity, Abercrombie & Fitch teamed with the Anti-Defamation League to create and carry out diversity training on college campuses across the country. The company also designed diversity training to be carried out in high school. According to Abercrombie & Fitch’s new vice president of diversity and inclusion Todd Corley, “This is an important initiative for us because it helps us support the dialogue among college students about the importance of appreciating difference.” 48

Many critics of the clothier, however, still feel that it is not living up to expectations—that any changes in the company are only superficial and not indicative of real change. 49 Many still believe that Abercrombie & Fitch is merely complying with the terms of the settlement and not utilizing the opportunity to create real change regarding the company’s hiring practices. The company maintains that 35 percent of 88,000 store employees are ethnic minorities;50 however, this claim is unsubstantiated and the court-appointed monitor has not confirmed it. The company maintains that it has not been in violation of the mandate to show “best efforts” in increasing diversity since the settlement. 51

The company may indeed not be strictly violating the terms of the settlement. A review of Abercrombie & Fitch’s Web site, which is a public representation of the company, shows a slide show of models with a variety of ethnic backgrounds. These images, however, are located only on Abercrombie & Fitch’s diversity page; all other models on the Web site are white. 52 Abercrombie & Fitch’s diversity page also includes statements related to diversity and the company’s commitment, strategy, and internal and external initiatives to promote diversity, in addition to a “Diversity & Inclusion” statement that reads: “Diversity and inclusion are key to our organization’s success. We are determined to have a diverse culture, throughout our organization, that benefits from the perspectives of each individual.” 53

Although Abercrombie & Fitch has been affected by the current downturn in the economy—it posted a 34 percent drop in same-store sales from 2008 to 2009 54 —it remains committed to protecting its image as “the essence of privilege and casual luxury.” 55 Unlike other retailers who are slashing price points, Abercrombie & Fitch is not pushing promotions. Continuing to grow its brand, the company plans to expand globally into Europe and Asia 56 as well as “grab another slice of the under-thirty market with a new brand known as Concept 5,” a project that the retailer has “already spent up to $50 million” to develop. 57

Abercrombie and Fitch’s understanding of workforce diversity is a work in progress. Problems still exist, as an employee with a disability is suing the retailer on the grounds that she was forced to work in the stockroom because of her prosthetic arm. 58 At the same time, however, there is progress. Corley, who represents the Abercrombie & Fitch voice on diversity, is in the beginning stages of clearly communicating diversity’s role within Abercrombie & Fitch: “The diversity of our associates and partners is the foundation for us to better serve our diverse customers and stakeholders worldwide. Our strategy is focused on a diverse work environment that reflects the community and our valuable customers.” 59

Discussion Questions
1. 1. How did Abercrombie & Fitch’s branding strategy of the “All-American” look lead to class-action lawsuits?

2. 2. Do you believe Abercrombie & Fitch managed their diversity crisis effectively?

3. 3. Do you believe that Abercrombie & Fitch has made legitimate, integrative organizational changes in terms of diversity management?

4. 4. Does the Abercrombie & Fitch Web site reflect the Company’s new approach to managing diversity?

Source: This case was written by Kathryn A. Cañas and Jacob K. Sorensen.

Case Response: Abercrombie & Fitch’s Story of Transformational Work
Creating a culture of inclusion and engagement at one of the most globally recognized retailers after a race, national origin, and gender discrimination lawsuit is not for the faint of heart—but that is where the story of Abercrombie & Fitch’s (A&F) diversity journey begins. However, it is not where the journey ends.

As part of its settlement agreement, the New Albany, Ohio-based retailer paid out $50 million and, under the direction of Todd Corley, Senior Vice President of Diversity, the company implemented a six-pronged companywide diversity strategy for creating a more diverse and inclusive culture. This organizational strategy is focused on the elements and drivers of organizational change, including: Leadership Commitment, Communication, Employee Engagement, Education & Training, Measurement & Accountability, and Policy & System Integration. Individually, each element plays a key role in maintaining A&F’s focus on diversity and inclusion, but collectively they allow A&F to audit the standards and processes that fuel their drive to be best-in-class.

A few examples of how they have woven these elements into the fabric of the organization include:

· using social media to keep associates highly engaged in the dialogue around why inclusion is a core element to business success (e.g., lowering retention, sparking creativity, and creating a collaborative spirit among cross-functional teams);

· integrating diversity-related metrics and communications into documents reviewed by store management in the ordinary course of business;

· holding monthly meetings with store directors—who oversee the regional manager and district manager roles—to assess their involvement in executing the diversity strategy;

· visiting and auditing individual stores on their recruiting strategies and compliance with diversity training;

· auditing customer experience by using a racial mix of mystery shoppers/testers to ensure all customers in its 1,100 stores receive the same high level of service and a positive, energetic experience.

In order to help support and implement this strategy, A&F relies on their Executive Diversity Council (EDC) made up of senior leaders from several business units from across the organization. In January 2010, as an extension of the EDC, A&F created a Stores Diversity Council made up of district managers and recruiters to empower their associates to lead this effort from the stores. In May 2010, A&F launched a Distribution Center’s Diversity Council, recognizing that each employee population should become leaders in moving this initiative forward. In the fall of 2011, A&F expanded the Stores Diversity Council to include associates from Europe and Asia as a way to provide a different perspective on how issues of diversity are not only discussed but defined.

Abercrombie has made significant strides over the last seven years: Among its workforce of 85,000, the number of black, Latino, Asian, and associates from other underrepresented groups jumped from 10 percent (across 700 stores) to more than 50 percent (across 1,100 stores). A&F rolled out unique training programs such as interactive theater, to teach associates how to lead with an inclusive mind-set. District managers and recruiters have helped to implement leadership and employee-engagement initiatives such as publishing associate-written diversity essays and creating a Facebook page where associates can share diversity dialogue.

Along with his team at Home Office (WHQ), Corley maintains shared oversight to approximately 30 domestic and international recruiters. The recruiters are responsible for various projects; one specific responsibility is to help leverage diversity partnerships as a way to increase and monitor the level of diversity among in-store associates. Additionally, they serve in a consultative manner to coach and train associates in how inclusion impacts the store experience for associates and customers.

A&F has external strategic partnerships, both domestically and internationally. For instance, Abercrombie sponsored the International Society of Diversity and Inclusion Professionals’ Diversity & Inclusion Lending Library Launch at The Ohio State University as well as the recent European Diversity Awards in London. The company is also a partner with the National Society of High School Scholars which has 700,000 members in 160 countries.

Corley, who reports directly to Abercrombie’s Chairman & CEO Michael Jeffries, serves on several non-profit boards and chairs Georgetown University’s Consortium of Chief Diversity Officers. Characterized by pushing the envelope and looking for provocative ways to connect the A&F brand with strong messages around diversity and inclusion, Corley and A&F recently agreed to be a significant supporter of a national exhibit titled, RACE: Are We So Different?, which appeared at the Smithsonian Institute. It was recently displayed at the Center of Science and Industry (COSI) in Columbus, Ohio which is near the A&F headquarters. Their contribution not only supported the exhibit, but underwrote the keynote address at the close of the exhibit by world renowned author and foremost expert on the issue of race, Dr. Cornel West.